Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Demand for flat products like hot-rolled coils (HRC) and cold-rolled coils (CRC) witnessed an increase backed by a rise in auto sales in August, while sluggish real estate and infrastructure activities continue to impact rebar sales.


The steelmakers hiked HRC prices by Rs2,500/mt in September to hit Rs40,500/mt amid increased consumption by the auto sector, but the prices are still below the pre-COVID-19 levels of Rs42,000/mt. Automakers are gradually increasing output in line with improved sales. In August, India’s Passenger Vehicles sales increased by 14.16pc and two-wheeler sales rose by 3pc.


Mills in India are focusing more on domestic sales rather than exports. Indian mills are targeting $525-535/mt fob levels to Vietnam, China and other SE Asian buyers. Chinese appetite for imports has lowered while exports from China are likely to resume at $520-525/mt fob levels. This could pressure Asian HRC prices in the coming days, said a source. 

The rebar market is witnessing a lull in demand amid weak housing sales and rains delaying pick up of construction activities. The COVID-19 pandemic has also stalled many real estate projects. The economic stimulus packages rolled out by the government also failed to provide any respite to the real-estate or infrastructure segments, at least for the short term. 

On one hand, the Reserve Bank of India (RBI) lowered the lending rates for the businesses, encouraging banks to infuse money into productive sectors and lower the financial stress on the system. On the other hand, however, the RBI governor has asked these sectors to look beyond banks to fund stalled projects. He even suggested small and medium-scale merge with major real-estate companies for the completion of such projects. 


Rebar producers in different regions have adapted differently to overcome weak construction demand. Manufacturers in Kutch opted to export semis to stay afloat in the initial days of the pandemic, but as the prices of raw materials kept increasing producers turned to the domestic market. A slight rise in demand and prices in mid-August helped offset some higher input costs. In September, rebar prices failed to rise in tandem with flat steel prices. Manufacturers struggled with a slump in sales and were compelled to reduce prices down by Rs1,200/mt as on Sep 15.


Some mid-scale rebar producers in Gujarat have capped production, while a few are piling up finished inventory in anticipation of better sales in October.


Demand for rebar in East and South India is also muted. For almost a week, rebar prices in Chennai have remained unchanged. In Durgapur, prices are flat or down, but manufacturers mull to hike prices towards the end of September.


In Mandi Gobindgarh, GST raids pressured steel prices. The prices of rebar fell by Rs900/mt to Rs37,700/mt from Aug 17 to date.


Manufacturers cited that Oct-Dec season could spell a turnaround for the steel sector as construction and other economic activities return to pre-COVID levels.

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